BNY and Citadel Securities Test Tokenized U.S. Treasuries

BNY and Citadel Securities have completed a transaction demonstrating how tokenized U.S. Treasuries can move from settlement into financing, targeting a major bottleneck in traditional financial markets. According to CoinDesk, the effort focuses on how government bonds used as collateral for trading and borrowing can be transferred more efficiently between accounts and settlement systems.

Streamlining Collateral Mobility

Banks and trading firms rely heavily on U.S. government bonds to secure short-term loans and fund trading activity. Traditional transfers can take considerable time, tying up assets that could otherwise be deployed. By utilizing tokenized representations of U.S. Treasuries across both settlement and financing, the transaction aimed to show how firms might reuse collateral sooner and free up cash for other trades.

“Efficient movement of high-quality collateral is fundamental to well-functioning markets,” said Dan Doherty, digital assets operations lead at Citadel Securities, in a statement cited by CoinDesk.

Expanding Digital Capabilities

Following the transaction, BNY stated it plans to introduce more digital cash and tokenized deposit capabilities to support blockchain-based settlement. Additionally, the custody bank expects to extend the operating hours of its traditional settlement systems for Federal Reserve-eligible securities and U.S. triparty transactions next year, aiming to align with European and Asian trading hours.

“By using a tokenized representation of a U.S. Treasury across both settlement and financing, we are enabling more connected, efficient and always-on financial system,” said Carolyn Weinberg, chief innovation and market transformation officer at BNY.

Key facts

• BNY and Citadel Securities completed a transaction using tokenized U.S. Treasuries.
• The test aimed to show how tokenized government bonds can move from settlement into financing.
• BNY plans to expand digital cash services and traditional settlement hours.
• The bank aims to extend operating hours for Fed-eligible securities and triparty transactions to reach European and Asian trading hours next year.